How the Houston Police Department Recovered $150K in Stolen Crypto

The Houston Police Department (HPD) has long been at the forefront of innovative law enforcement strategies, serving one of the largest and most diverse cities in the United States. With over 5,000 officers, HPD is tasked with addressing a wide range of complex crimes, including the growing threat of cryptocurrency-related fraud. 

In recent years, financial crimes involving digital assets have surged in Houston, reflecting national trends as scammers exploit new technologies to target victims. And HPD has responded by strengthening its capabilities to tackle these evolving threats. The department’s Cyber Crimes Unit — operating within the Property and Financial Crimes Division — has taken the lead in investigating and recovering stolen digital assets, handling cases that involve millions of dollars in fraudulent transactions each year.

From social media to stolen crypto

The case began when an elderly Houston resident fell victim to a sophisticated online investment scam. The victim was first contacted via Facebook and invited to join an investment group on WhatsApp — a tactic scammers use to create a false sense of community and trust. Within the group, fraudsters posed as successful investors, sharing fake testimonials and screenshots of fabricated profits. Posing as financial advisors, they used high-pressure tactics and convincing advice to persuade the victim to transfer money to several cryptocurrency wallets, promising high returns.

Initially, the victim deposited USD 26,000 and was shown falsified gains on a professional-looking but fraudulent investment platform, complete with fake account balances and transaction histories. Encouraged by apparent profits and reassured by constant contact with the scammers, he continued investing until he had transferred over USD 1 million in Ethereum throughout 2023. When he tried to withdraw funds, the scammers demanded additional payments, claiming they were for taxes and processing fees — a common strategy scammers employ to prolong the deception. Realizing he’d been defrauded, the victim reported the crime to HPD.

HPD’s case management team flagged the report due to the victim’s significant financial loss and the complexity of the fraud. The case landed on the desk of Detective J. Taylor, the department’s leading expert in cryptocurrency fraud. “Since I was the only one with access to blockchain tracing tools, I picked up the case and started investigating immediately,” said Taylor.

Following the money on the blockchain

Utilizing blockchain intelligence tools such as TRM Labs, Detective Taylor conducted an analysis of the transactions. “I plugged in the initial wallets, and within minutes, I traced the movement of funds,” Taylor explained. The investigation revealed that the stolen Ethereum had been funneled through a series of addresses before arriving at three separate accounts at a single exchange.

One of the key breakthroughs in the case was linking the exchange accounts to organized scam networks. “It was fortunate that the funds only went through two intermediary wallets,” Taylor noted. This reduced the complexity of the recovery process significantly.

TRM Labs played a crucial role in mapping the transaction flow and providing actionable intelligence. “Without TRM Labs, I would have had to manually trace every transaction, which could have taken hours or even days,” Taylor noted. “The platform made it possible to visualize the entire money trail in a matter of minutes.”

Taylor promptly requested that the exchange freeze the suspect’s accounts. “Initially, I sent a legal request, and they agreed to freeze the accounts for 60 to 90 days,” he said. Working closely with the District Attorney’s office, he prepared a seizure warrant to ensure the recovery of funds.

In the process, Detective Taylor encountered challenges navigating the exchange’s compliance requirements. “This was the first time I handled a seizure like this, so I had to figure out exactly how to frame the legal request,” he admitted. The challenges stemmed from the exchange's stringent documentation requirements, including the need for detailed transaction histories, evidence linking the suspect accounts to criminal activity, and precise legal language to meet international compliance standards. Taylor consulted with legal advisors familiar with digital asset regulations and collaborated with the District Attorney’s office to refine the seizure warrant. “I had to ensure every detail was meticulously documented, and after multiple revisions, we were able to meet their compliance standards,” he explained.

From recovery to prevention through public awareness

As a result of these efforts, HPD successfully froze accounts containing approximately USD 300,000. After a thorough investigation, Taylor was able to prove that USD 150,000 of those funds directly originated from the victim’s transactions. “It wasn’t the full amount, but it was a substantial win,” he said. The recovered funds were ultimately returned to the victim, marking one of the first successful cryptocurrency recoveries in Harris County, Texas.

Beyond this single case, the success story has had a lasting impact on HPD’s approach to cybercrime. “This case demonstrated that with the right tools and training, local law enforcement can effectively combat cryptocurrency fraud,” Taylor emphasized. The department is now working towards setting up a dedicated law enforcement wallet to streamline future asset recoveries, enabling faster seizures and improved fund management during investigations.

One of the most innovative outcomes of this case has been HPD’s collaboration with the District Attorney’s office to conduct public briefings on cryptocurrency-related crime. These briefings are designed to educate both law enforcement professionals and the broader community about the latest fraud schemes, investigative techniques, and best practices for asset recovery. What makes these briefings unique is their dual focus: not only do they provide technical insights for investigators, but they also raise public awareness to help prevent future scams. “We’ve found that educating the public is just as critical as catching the criminals,” Taylor noted. These sessions foster greater transparency, encourage victims to report crimes sooner, and strengthen inter-agency collaboration by sharing real-world case studies and investigative strategies.

For victims of cryptocurrency fraud, this case offers a beacon of hope. While not every stolen dollar may be recovered, HPD’s success proves that timely reporting, advanced blockchain analytics, and persistent law enforcement efforts can yield positive outcomes in the fight against cybercrime.